Dimensional Emerging Markets Sustainability Core 1 ETF (DFSE)

Overview

The Dimensional Emerging Markets Sustainability Core 1 ETF (DFSE) seeks long-term capital appreciation by investing in a broad range of emerging market companies, emphasizing sustainability factors. It aims to outperform the market while considering environmental, social, and governance (ESG) criteria. It utilizes a market-cap-weighted approach with tilts based on sustainability scores.

Reputation and Reliability

Dimensional Fund Advisors is a well-regarded firm known for its evidence-based investment approach and low-cost strategies.

Management Expertise

Dimensional Fund Advisors has a highly experienced management team with a strong track record in quantitative investing and sustainable investing.

Goal

To achieve long-term capital appreciation while considering sustainability factors in emerging markets.

Investment Approach and Strategy

Strategy: The ETF uses a market-cap-weighted approach, overweighting companies with higher sustainability scores and underweighting those with lower scores.

Composition Primarily invests in stocks of companies located in emerging market countries, focusing on companies with favorable sustainability profiles.

Market Share: DFSE holds a relatively small market share within the broader emerging market ETF landscape, but is growing.

Total Net Assets (AUM): 111276767

Key Competitors

• Vanguard FTSE Emerging Markets ETF (VWO)
• iShares Core MSCI Emerging Markets ETF (IEMG)
• Schwab Emerging Markets Equity ETF (SCHE)

Competitive Landscape

The emerging markets ETF sector is highly competitive, dominated by low-cost, broad-market ETFs like VWO and IEMG. DFSE differentiates itself through its sustainability focus. Its advantage is attracting ESG-conscious investors, but the disadvantage is potentially higher expense ratios and tracking error compared to pure market-cap-weighted ETFs.

Historical Performance: Past performance is not indicative of future results. The ETF is new, so there is limited historical performance data available.

Benchmark Comparison: The ETF's performance should be compared to a broad emerging market index with ESG considerations, though such index tracking is still developing.

Expense Ratio: 0.3

Average Trading Volume

The average trading volume of DFSE is moderate, which can impact trade execution depending on the order size.

Bid-Ask Spread

The bid-ask spread of DFSE varies depending on market conditions and trading volume, and is generally tight but can widen during periods of volatility.

Market Environment Factors

Economic growth in emerging markets, global trade policies, interest rate changes, and political stability all affect DFSE. Investor sentiment towards ESG also drives the fund.

Growth Trajectory

The growth trajectory of DFSE will depend on the increasing demand for sustainable investing and its ability to attract assets. There are no announced plans to change strategies or holdings.

Competitive Edge

DFSE benefits from Dimensional's established reputation for quantitative investing and low-cost strategies, combined with a growing investor interest in sustainable investing. The ETF's factor-based approach, tilting towards companies with better sustainability profiles, offers a differentiated investment strategy in the competitive emerging markets landscape. Its systematic approach provides a disciplined framework for incorporating ESG considerations into investment decisions. The relatively low expense ratio for a sustainability-focused ETF is also a key advantage.

Volatility

DFSE's volatility is expected to be similar to other emerging market ETFs, which tend to be more volatile than developed market ETFs.

Market Risk

The ETF is subject to market risk, including economic downturns, political instability, and currency fluctuations in emerging market countries.

Ideal Investor Profile

The ideal investor is a long-term investor who is seeking exposure to emerging markets and prioritizes sustainability factors in their investment decisions.

Market Risk

DFSE is best for long-term investors who understand the risks and opportunities associated with emerging markets and are committed to sustainable investing.

Dimensional Emerging Markets Sustainability Core 1 ETF (DFSE) provides access to a broad range of emerging market equities with a focus on sustainability, managed by a reputable firm known for its evidence-based approach. The ETF seeks long-term capital appreciation by overweighting companies with higher sustainability scores. It is suitable for long-term investors who prioritize ESG factors and are comfortable with the volatility associated with emerging markets. Its competitive advantage lies in its combination of Dimensional's quantitative approach and increasing investor interest in sustainable investing, even though it has a small market share.

• ESGE
• VSGX
• EFIV

Data Sources:

• Dimensional Fund Advisors website
• ETF.com
• Morningstar
• Bloomberg

Disclaimers:

The data and analysis provided are for informational purposes only and should not be considered investment advice. Investing in ETFs involves risk, including the potential loss of principal. Past performance is not indicative of future results. Consult with a qualified financial advisor before making any investment decisions.